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TransAlta Corporation

Third Quarter 2016 Results

Friday November 4, 2016

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This presentation may include forward-looking statements or information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities

legislation. All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumptions were made and on

management’s experience and perception of historical trends, current conditions, and expected future developments, as well as other factors deemed appropriate in the

circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as “may”, “will”,

“believe”, “expect”, “anticipate”, “intend”, “plan”, “project”, “forecast”, “foresee”, “potential”, “enable”, “continue”, or other comparable terminology. These statements are not

guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance to be materially different from that

projected. In particular, this presentation contains forward-looking statements pertaining to our business strategy and goals, including the conversion of coal-fired generation to gas

fired, the expansion of existing wind and hydro assets, and the development of greenfield solar opportunities; anticipated future financial performance; the timing and the completion

and commissioning of projects under development, including the South Hedland power project and its associated costs and benefits; ability to execute project level financings; ability

to build a portfolio of greenfield projects in Canada and Australia; expectations related to future earnings and cash flow from operating and contracting activities, including estimates

of comparable earnings before interest, taxes, depreciation, and amortization (“EBITDA”), comparable funds from operations (“FFO”), and comparable free cash flow; expectations in

respect of financial ratios and targets, including adjusted comparable FFO to adjusted net debt, and adjusted net debt to comparable EBITDA; the Corporation’s plans and strategies

relating to repositioning its capital structure, including the ability to secure $400 million to $600 million in project-level financing; expected governmental regulatory regimes and

legislation and their expected impact on TransAlta and the timing of the implementation of such regimes and regulations, as well as the cost of complying with resulting regulations

and laws; the outcome of negotiations with the Government of Alberta in relation to coal-fired generation transition under the Climate Leadership Plan; and expectations regarding

the future competitive environment within Alberta.

Factors that may adversely impact our forward-looking statements include risks relating to: fluctuations in market prices and the availability of fuel supplies required to generate

electricity; our ability to contract our generation for prices that will provide expected returns; the regulatory and political environments in the jurisdictions in which we operate;

environmental requirements and changes in, or liabilities under, these requirements; changes in general economic conditions, including interest rates; operational risks involving our

facilities, including unplanned outages at such facilities; disruptions in the transmission and distribution of electricity; the effects of weather; disruptions in the source of fuels, water,

or wind required to operate our facilities; natural or man-made disasters; the threat of domestic terrorism and cyberattacks; equipment failure and our ability to carry out, or have

completed, repairs in a cost-effective manner or timely manner; commodity risk management; industry risk and competition; fluctuations in the value of foreign currencies and foreign

political risks; the need for additional financing; structural subordination of securities; counterparty credit risk; insurance coverage; our provision for income taxes; legal, regulatory,

and contractual proceedings involving the Corporation; outcomes of investigations and disputes; reliance on key personnel; labour relations matters; risks associated with the

Keephills 1 arbitration; risks associated with development projects and acquisitions, including delays in the construction of or increased costs associated with the South Hedland

power project; adverse regulatory developments, including our potential inability to secure a mutually beneficial coal transition arrangement with the Alberta Government in respect of

the Alberta Climate Leadership Plan; and any market disruption or changes in market regulation, including any actions arising from the buyers' termination of the applicable power

purchase arrangement. The foregoing risk factors, among others, are described in further detail in the Risk Management section of our Management Discussion and Analysis and

under the heading “Risk Factors” in our Annual Information Form. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are

cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this document are made only as of the date hereof and we do

not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise, except as required by applicable laws. Readers are

cautioned not to place undue reliance on forward-looking statements, which reflect the Corporation's expectations only as of the date of this news release. The purpose of the

financial outlooks contained in this presentation is to give the reader information about management's current expectations and plans and readers are cautioned that such

information may not be appropriate for other purposes. In light of these risks, uncertainties, and assumptions, the forward-looking events might occur to a different extent or at a

different time than we have described, or might not occur at all. We cannot assure that projected results or events will be achieved.

Certain financial information contained in this presentation, including comparable FFO and comparable free cash flow, may not be standard measures defined under International

Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures presented by other entities. These measures should not be considered in isolation or as a

substitute for measures prepared in accordance with IFRS. For further information on non-IFRS financial measures we use, see the section entitled “Non-IFRS Measures” contained

in our Management Discussion and Analysis, filed with Canadian securities regulators on www.sedar.com.

Forward Looking Statements

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Agenda

Q3 & YTD Highlights

2016 Goals and Priorities

Financial Summary

Questions and Answers

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2016 Goals and Priorities

Achieve our operational, financial, and safety targets

Continue to reposition our capital structure

Grow our portfolio of contracted gas and renewable

assets

Secure a mutually beneficial coal transition arrangement

with the Alberta Government

1

2

3

4

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Q3 and YTD 2016 - Building our “Execution Advantage”

Q3 & YTD 2016 Commentary

• Surpassed all financial metrics from 2015 in both the third quarter and year-to-date

• Positive contributions from assets acquired in 2015, solid performance from gas and

renewables portfolio, cost reduction initiatives are at the heart of 2016 performance

• Solid availability in the third quarter 2016; ahead of 2015 on year-to-date basis

1 Adjusted for economic dispatching at U.S. Coal.

(in $CAD millions) 2016 2015 2016 2015

Comparable EBITDA $244 $219 $771 $677

Comparable FFO $163 $126 $535 $497

Comparable FCF $57 $8 $206 $141

Adjusted Availability(1) 89.0% 91.2% 89.3% 87.8%

3 mos. ended

Sept. 30

9 mos. ended

Sept. 30

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2016 Free EBITDA – Gas & Renewables Driving Success

(1) Free EBITDA = Comparable EBITDA less Sustaining Capital, and excluding Energy Marketing and Corporate.

• Gas-fired and renewable generation has contributed $415 million of

Free EBITDA(1) from operations in 2016

$M

0

100

200

300

400

500

600

700

Canadian & U.S.Coal

Canadian Gas Australian Gas Wind & Solar Hydro Renewable andGas-FiredGeneration

Total FreeEBITDA

YTD 2016 YTD 2015

777

2016 Goals and Priorities

Continue to reposition our capital structure

• $400 - $600 million of project level financing

• $165 million closed in first quarter of 2016

• Progressing toward next financing

2

3 Grow our portfolio of contracted gas and renewable

assets

• South Hedland operational in mid-2017

• Building the portfolio of greenfield projects in

Canada and Australia

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Third Quarter 2016 Review

Canadian Coal• Cost reductions offset by higher coal costs from heavy rains and

unplanned outages

Wind and Solar• Contribution from assets added in 2015 and improved wind resource in

the East offset low power prices in AB

Energy Marketing • Return to normal level of gross margin from short-term strategies

3 Months Ended

September 30

9 Months Ended

September 30

(in CAD$ millions) 2016 2015 2016 30, 2015

Adjusted Availability(1) 89.0% 91.2% 89.1% 87.3%

Canadian Coal 99 101 295 267

U.S. Coal(2) 13 9 27 41

Canadian Gas(2) 53 50 174 155

Australian Gas(2) 32 31 96 88

Wind and Solar 32 23 129 111

Hydro 19 15 62 54

Energy Marketing 10 6 39 11

Corporate (14) (16) (51) (50)

Total Comparable EBITDA 244 219 771 677

1 Adjusted for economic dispatching at U.S. Coal.

2 See the Accounting Changes section of this quarter’s MD&A for information on changes in the presentation of the Gas reportable segment.

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Finance & Treasury Overview

Area of Focus Execution

Liquidity• Average liquidity of $1.3B since 2014; liquidity of $1.7B at

September 30, 2016

Area of Focus Execution

Financial Ratios• Consistently moved the mark on ‘Adjusted FFO to Adjusted Net

Debt’

Ratio Q4/15 Q1/16 Q2/16 Q3/16 Target

Comparable FFO before Interest to Adjusted Interest 3.8 3.7 3.7 3.9 4 – 5x

Adjusted FFO to Adjusted Net Debt 15.2 16.2 16.5 17.6 20 – 25%

Adjusted Net Debt to Comparable EBITDA 5.0 4.6 4.3 4.1 3 – 3.5

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

Dec 31/14 Mar 31/15 Jun 30/15 Sep 30/15 Dec 31/15 Mar 31/16 June 30/16 Sep 30/16

C$

Bill

ion

Cash

Available

Liquidity

Committed

Credit Facilities

1010

2016 YTD vs 2016 Guidance

$7

71

$9

90

$1

,10

0

$-

$200

$400

$600

$800

$1,000

$1,200

YTD Low High

Guidance

Comparable EBITDA

$5

35

$7

55

$8

35

$-

$200

$400

$600

$800

$1,000

YTD Low High

Guidance

Comparable FFO

$2

06

$2

50

$3

00

$-

$100

$200

$300

$400

YTD Low High

Guidance

86

% 87

%

89

%

80%

85%

90%

YTD Low High

Guidance

Comparable FCF CAD Coal Availability

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TransAlta’s Coal Transition Positioning

TransAlta is well-positioned to transition from coal to

renewables and gas-fired generation by 2030

• The conversion of coal-fired generation to gas-fired

generation

• The expansion of existing wind and hydro assets

• The development of greenfield solar opportunities

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Third Quarter 2016 Key Takeaways

Year-to-date performance is solid both financially and

operationally

2 Progress made against all of our 2016 goals

1

3 Transitioning off coal requires closure on coal

compensation and greater certainty on the future path

for carbon taxes and emission standards

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Question and Answer